Most likely filled with a certain degree of foreboding, Volkswagen signed today contracts with their joint venture partner FAW to build a new plant in the south of China, we hear from a Volkswagen press release. That VW has designs on building cars in the South of China is no news to the avid TTAC reader. But why the anxiety?

The new Volkswagen plant will be built in Foshan, in the Southern Chinese region of Guangdong. Foshan? Yep, the same town where Honda has all those labor troubles. Foshan is ground zero for alleged plans by the Chinese government “to double average wages over the five years from 2011,” as The Nikkei [sub] heard.

Right into that hornet’s nest will VW place “a complete production facility with press shop, body shop, paint shop and assembly unit is to be constructed on a site with an area of 170 hectares. The maximum annual production capacity will be 300,000 units. Construction work is to start at the end of 2010 and the new plant will have a workforce of about 4,000 employees by 2013. The investment of about 520 million euros is to be funded from the cash flow of FAW-Volkswagen.”

3 Comments on “Volkswagen To Open New Plant In China’s Strike Central...”

well, the advantages of proximity to other parts suppliers probably was a greater factor for location than trying to worry about a potential strike. If workers feel they’re being unfairly treated, they’re going to rise up, no matter where they are.

A plant in Guangdong province also given VW a foothold in the south, which has traditionally been the domain of Honda and some other Japanese manufacturers…

Regionalism is a big problem in China, as various provinces have governments that seek to protect their commerical interests like small fiefdoms. If you go to Shanghai, almost all the taxis are VW’s, with Beijing’s fleet consisting almost entirely of Hyundais. In each case, the municipal and provincial government are heavily involved in the auto sector, and have a vested interest in promoting their own products…. (VW manufactured in Shanghai, Hyundais in Beijing, Toyotas in Tianjin, Citroens and Suzukis in Wuhan, etc)

By opening a plant in Foshan, Guangdong, VW is venturing into a local market that has historically be dominated by Honda and other Japanese manufacturers… should be interesting to see if they will have much of an impact on VW’s representation on the road in that part of China.